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FM 402 EC PUBLIC PROCUREMENT DIRECTIVES
CANCELLATION OF PREVIOUS FM 1. This FM supersedes and replaces FM 66 dated 11 August 1993 which is hereby cancelled. 2. The purpose of this FM is to describe the principal elements of the EC rules which apply to public procurement, their effect upon PPARC, and to outline the procedures to be followed. 3. Directives under the EEC Treaty set out a legal framework to which certain public bodies must adapt their contract award procedures. These Directives, known as the EC Public Procurement Directives, have been implemented in UK law by Regulations made by the Treasury under section 2(2) of the European Communities Act 1972. The Directives divide procurement into three major areas: Works, Services and Supplies. The relevant Regulations are:
5. The EC Public Procurement Directives impose stringent tendering obligations on purchasers in order to allow suppliers free access to national public sector markets which in the past were heavily protected. Purchasers must publish information in the Supplement of the Official Journal of the European Communities (OJEC) about contracts which are above certain thresholds so that interested parties may, where appropriate, submit tenders for such contracts. Contracts must then be awarded on the basis of either the lowest price tendered or the most economically advantageous tender. 6. The EC Public Procurement Directives express thresholds in ECU with the relevant exchange rates being fixed biennially. The current thresholds in pounds sterling are shown in Appendix A to this FM and can also be found on the web site of the Système d'Information pour les Marchés (SIMAP). For the purposes of the thresholds, PPARC is regarded as one of the "other contracting authorities". 7. A Remedies/Compliance Directive also exists covering enforcement procedures. This is intended to give swift and effective remedies to those harmed by infringements of the legislation. SCOPE OF THE DIRECTIVES Works 8. The Works Directive covers all building and civil engineering work including demolition and installation of fixtures and fittings.Services 9. The Services Directive covers contracts for services subject to certain exemptions. This Directive has a two-tiered application where services are divided into two categories: priority services (Part A Services) where the full provisions of the Directive apply and residual services (Part B Services) where it is only necessary to publish a notice of the award of the contract and to follow the common rules relating to technical specifications. A full list of the services in each category can be found at Appendices B and C to this FM. They may also be viewed on the SIMAP web site. Supplies 10. The Supplies Directive covers the acquisition of goods whether by purchase or hire including siting or installation costs and includes contracts for the rental or lease of goods. 11. Contracts with an individual value above the threshold (see Appendix A) for the relevant Directive are automatically subject to the procedures laid down. AGGREGATION OF CONTRACTS 12. In determining the value of contracts for threshold purposes the Directives also require aggregation of contracts with lower values in certain circumstances. Thus contracts with individual values below the threshold can become subject to the Directives. Examples of when this may apply are:
14. Where the total value of a call-off contract or the expected value of a framework agreement exceeds the appropriate threshold, irrespective of the value of the individual warrants or orders, then it should be advertised in the OJEC. 15.
Where there is a recurrent need for goods or services and PPARC enters into a
series of contracts for similar items at different times, or places a contract
which is renewable or valid for an indefinite period, then there are two methods
of valuing the requirement for threshold purposes: (i) to take the previous twelve months’ aggregated total payments for goods or services of that type and adjust it for anticipated changes for the next twelve months; and 16. Where goods or service are to be used solely by one of PPARC’s Establishments and where that Establishment has sole control over purchasing these goods or services, then the valuation required for threshold purposes need only take account of the goods or services required by that Establishment alone. 17. Procurement Group, Swindon Office, should be consulted in cases of doubt about whether or not the aggregation rules apply to any particular purchase. ADVERTISING REQUIREMENTS 18. The EU-wide publicity of public procurement contracts over the relevant threshold is achieved by the publication of three kinds of notice in the OJEC:
19. Notices must be sent "as rapidly as possible and by the most appropriate means" to the EU Office for Official Publications in Luxembourg, who ensure that they are published within 12 days in the daily supplement to the OJEC and on the Tenders Electronic Daily database. The notices are to be sent out as shown in the model notices annexed to the Directives. Copies of two of the more frequently used forms are appended to this FM at Appendices I and J. The full set of forms may be found on the SIMAP web site and completed on-line. CONTRACT AWARD PROCEDURES 20. In awarding contracts, PPARC must follow one of three procedures: the open procedure, the restricted procedure or the negotiated procedure. PPARC has a free choice between the open and restricted procedures but may only use the negotiated procedure in limited circumstances. There is an "accelerated procedure" which reduces the timescales for urgent requirements advertised under the restricted and negotiated procedures. The use of the accelerated procedure is an exception to the rule and likely to be challenged by the Commission. The reason for the urgency must be stated in the Notice. Post tender negotiation on any factor that may affect the price of the contract is only permissible if the tender exercise has been carried out under the negotiated procedure. Bid clarification is permissible under all procedures.21. The illustrations at Appendices D, E, F, G show the timescales required for each procedure. It should be borne in mind that adequate time will be required in advance of commencement of the tendering procedure for drafting of the specification; the determination of evaluation criteria and an evaluation procedure; and the production of the tender documents. Appendix H gives an indication of the amount of time required for each stage of the procurement process including the in-house elements. Open procedure 22. Under this procedure all interested persons may tender for the contract.23. The contract notice inviting tenders published in the OJEC must provide a minimum of 52 days for submission of tenders (this can be reduced to 36 days for Works and Services if a PIN has already been published). Restricted procedure 24. Under this procedure only contractors invited by PPARC may submit tenders.25. The contract notice published in the OJEC inviting requests to participate must allow a minimum of 37 days (or 15 days if "urgency renders impracticable" longer time limits) for requests to be submitted. Subsequently, when inviting selected candidates to submit tenders, it is necessary to allow a minimum of 40 days (this can be reduced to 26 days for Works and Services if a PIN has already been published, or 10 days under the urgency procedure) for a response. The number of candidates invited to tender should be "sufficient to ensure genuine competition". Negotiated Procedure 26. Under this procedure, PPARC may consult contractors or suppliers of its choice and negotiate the terms of the contract with one or more of them. This procedure is only permitted in exceptional circumstances and is divided into two categories:(i) without prior publication of a tender notice;27. Examples of situations where it may be permissible to proceed without publication of a tender notice include:
28. Examples of situations where a tender notice must be published inviting requests to participate allowing a minimum of 37 days (or 15 if urgent) include:
29. For nearly all PPARC contracts the most appropriate procedure will be the restricted procedure as this provides maximum flexibility in the use of selection criteria. The choice of procedure ultimately rests with Procurement staff. Establishment procurement staff shall be responsible for maintaining written records justifying the choice of procedure, selection of tenderers and the winning bid(s) and making such records available to the EU if so required. TECHNICAL SPECIFICATIONS 30. For purchases falling within the scope of the Directives, PPARC is obliged to consider products from other EU Member States, manufactured to a different design but which have equivalent performance, on equal terms with products which meet national or other preferred standards. 31. Demanding Officers must ensure that their technical specifications comply with the requirements of the Directives. PPARC must use a British Standard implementing a European Standard whenever such a standard exists. This obligation extends to the use of common technical specifications which are defined as those drawn up with a view to uniform application in all Member States. Departure from these obligations is permitted only in limited circumstances. If there is no European Standard or common technical specification then alternatives may be used but in a given order of preference. For further guidance see Annex A or contact the Head of Procurement for advice. QUALIFICATION AND SELECTION OF SUPPLIERS 32. PPARC is obliged to use the selection criteria laid down in the Directives in assessing the suitability of tenderers. These criteria fall into three categories: legal eligibility; financial and economic standing; and technical capacity. Under the restricted or negotiated procedures it is only those contractors who establish their suitability who may be invited to submit tenders or to negotiate. Establishment Finance Officers shall be responsible for ensuring compliance with the prescribed selection criteria. Annex B contains further details of the information contractors may be required to submit and the criteria that may be employed in selection. Additional information may be found in the SIMAP web site. AWARD OF CONTRACT CRITERIA 33. PPARC normally awards contracts on the basis of the most economically advantageous tender. This allows the best value for money to be sought according to various criteria such as period for completion or delivery, running costs, cost effectiveness, quality, aesthetic and fundamental characteristics, technical merit, after sales service and technical assistance as well as price. PPARC must state the criteria on which it intends to base its decision (where possible in descending order of importance), in the contract notice or in the tender documents. Procurement staff will contact Demanding Officers to establish the appropriate criteria. PPARC may also specify that bids offering variations on the stated requirements will be considered. 34. PPARC may not reject any tender solely on the grounds that the price appears abnormally low without first asking for and considering the tenderer's explanations. PPARC may not under any circumstances decide in advance that no acceptable explanation could be given. AFTER THE AWARD 35. It is a requirement of the Supplies and Services Directives that a Contract Award Notice be published no later than 48 days after the award of a contract. This applies whichever procedure has been followed. The Establishment placing the contract is responsible for publishing the Notice. The information to be provided in such Notices varies according to which Directive is relevant. (See the SIMAP web site for full details.) 36. Establishments should maintain records of contracts awarded as a result of tender exercises conducted under the EC procurement rules. This is to enable statistical returns to be produced without delay when required by Treasury.37. Procurement staff are also required to debrief unsuccessful tenderers upon request. If an unsuccessful applicant or tenderer requests information on the reasons for the rejection of his application or tender, then Establishments must give this information within 15 days of receiving such a request. 38.
Any queries concerning the content or interpretation of this FM should be
referred to Tom Hinde, Head of Procurement, PPARC, Finance Division, Swindon
Office, tel: 01793 442045, Tom Hinde
Appendix A to FM 402 THRESHOLDS FOR THE YEAR 1 JANUARY 2000 TO 31 DECEMBER 2001
Appendix B to FM 402 PRIORITY (PART A) SERVICES Category Services 1. Maintenance and repair of vehicles and equipment 2. Transport by land, including armoured car services and courier services but not including transport of mail (Category 4) and transport by rail (Category 18)3. Transport by air but not transport of mail (Category 4) 4. Transport of mail by land and air, but not by rail (Category 18) 5. telecommunications services other than voice telephony, telex, radiotelephony paging and satellite services6. Finance Services:
7. Computer and related services 8. R&D services where the benefits accrue exclusively to the contracting authority for its use in the conduct of its own affairs and the services are wholly paid for by the contracting authority 9. Accounting, auditing and book-keeping services 10. Market research and public opinion polling services 11. Management consultancy services and related services, but not arbitration and conciliation services12. Architectural services: engineering services and integrated engineering services: urban planning and landscape architectural services: related scientific and technical consulting services: technical testing and analysis services 13. Advertising services 14. Building-cleaning services and property management services 15. Publishing and printing services on a fee or contract basis 16. Sewerage and refuse disposal service: sanitation and similar services
Appendix C to FM 402 RESIDUAL (PART B) SERVICES Category Services 17. Hotel and restaurant services 18. Transport by rail 19. Transport by water 20. Supporting and auxiliary transport services 21. Legal services 22. Personnel placement and supply services 23. Investigation and security services, but not armoured car services (Category 2) 24. Education and vocational education services 25. Health and social services 26. Recreational, cultural and sporting services 27. Other services
Appendix D to FM 402 OPEN PROCEDURE FOR THE PROCUREMENT OF SUPPLIES AND SERVICES
Appendix E to FM 402 RESTRICTED PROCEDURE FOR THE PROCUREMENT OF SUPPLIES AND SERVICES
Appendix F to FM 402 NEGOTIATED PROCEDURE FOR THE PROCUREMENT OF SUPPLIES OR SERVICES WITH PRIOR PUBLICATION OF A NEGOTIATED PROCEDURE NOTICE
Appendix G to FM 402 NEGOTIATED PROCEDURE FOR THE PROCUREMENT OF SUPPLIES OR SERVICES WITHOUT PRIOR PUBLICATION OF A NEGOTIATED PROCEDURE NOTICE
Appendix H to FM 402 TYPICAL TIMESCALE FOR THE PROCUREMENT OF SUPPLIES OR SERVICES USING THE RESTRICTED PROCEDURE
Every effort will be made by Procurement staff to minimise these timescales where this is possible. NOTES
Appendix I to FM 402 FORM OF NOTICE TO BE PUBLISHED IN THE OJEC PURSUANT TO THE SUPPLIES DIRECTIVE UNDER THE RESTRICTED PROCEDURE
Appendix J to FM 402 FORM OF NOTICE TO BE PUBLISHED IN THE OJEC PURSUANT TO THE SERVICES DIRECTIVE UNDER THE RESTRICTED PROCEDURE
Annex A to FM 402 TECHNICAL SPECIFICATIONS 1. Technical Specifications in the contract documents should be defined by reference to any relevant European specification, ie a British standard implementing a European standard (as formulated by a European Standards body such as CEN or CENELEU) or a common technical specification (one drawn up with a view to uniform application in all Member States). 2. The relevant European specification need not be used if:
3. If there is no relevant European specification or paragraph 2 above applies, PPARC may instead refer to (in order of preference):
4. Unless it is essential to describing what is required, specifications must not include references to particular makes, sources or processes which have the effect of favouring some suppliers or eliminating others. Where it is essential to refer to a trade mark, patent, origin or process, then such reference must be qualified by the words "or equivalent".
Annex B to FM 402 LEGAL, FINANCIAL AND TECHNICAL CAPACITY Legal eligibility 1. The Directives (eg Article 29 of the Services Directive) list the various "legal" grounds upon which contractors may be disqualified, such as bankruptcy, criminal offence, professional misconduct, non-payment of tax or social security or serious misrepresentation to the contracting authority. PPARC may also require contractors to prove their enrolment in the appropriate trade or professional register of their home country (eg in the case of the UK, a certificate from the Registrar of Companies). If the contractor can prove such registration, PPARC cannot require that undertaking to hold registration in the State in which the contract is awarded. Financial and economic standing 2. The Directives (eg Article 31 of the Services Directive) describe the type of references which applicants for public contracts may be required to furnish in order to prove their economic and financial standing. These include appropriate bank statements and balance sheets, a statement of the firm's overall turnover and its turnover in respite of the particular works, goods or services to which the contract relates over the three previous financial years. PPARC must specify which references it requires in the contract notice or invitation to tender. If for any valid reason a candidate is unable to supply these references, PPARC must allow the applicant to prove their financial standing by any other document PPARC deems appropriate. Technical Capacity 3. Under the Services Directive (Article 32) a contractor may prove his technical capacity by furnishing a list of the principal services provided over the previous three years (plus certificates of satisfactory delivery) and statements of the firm's equipment, quality control measures, technical back-up, average manpower and the education and professional qualifications of its staff. Similar lists appear in the Works and Supplies Directives. PPARC must specify the information it requires in the contract notice or invitation to tender. These lists (in contrast to the ones for financial standing) appear to be exhaustive in nature. 4. However, PPARC may only concern itself with the nature of the contractor's experience and not with where it was acquired. It is unlawful discrimination for an authority to require, for example, that tenderers have carried out a certain number of similar contracts in the particular country or region where the advertised contract is to be carried out. |
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